Business Rules Management Systems

Add Flexibility To Insurer Infrastructure

Software can integrate with legacy as well as Web-basedapplications

Market pressures are forcing all types of insurers to enhancetheir ability to quickly change the way they do business.

The speed with which they can react to dynamic market conditionsand customer requirements is a make-or-break critical successfactor. The pressure for flexibility makes elimination ofbottlenecks that thwart rapid modification of business processes ahigh priority.

Unfortunately, for most insurers, making even simple businesschanges to their IT systems can take weeks or months. The policyrules governing critical business processes are often "hard-coded,"embedded deep within multiple applications.

From applicant screening and underwriting to claims processing,the task to maintain these rules consistently has become verycomplex and daunting for IT organizations. The lack of acentralized policy rule repository often results in inconsistentrepresentation and outcomes across the many disciplines.Ultimately, this can lead to fines--or even worse, the loss ofbusiness to a competitor.

To address this problem, insurers increasingly are turning toBusiness Rules Management Systems--(BRMS), a.k.a. Business RulesEngines.

Simply put, BRMS is software that enables other applicationlogic to change more flexibly and quickly. It does this byexternalizing business logic from underlying IT systems,representing the logic in a central BRMS repository where it can bequickly and easily viewed and changed by business and ITprofessionals, while providing the decision support needed for theoverall system to function.

A BRMS can integrate with legacy applications as well as the newWeb services technologies that are being increasingly adopted byinsurers.

Why go through the pain and expense of a "rip-and-replace"approach to outmoded legacy applications when a BRMS can prolongtheir useful lives by rendering them much more flexible? (For keyadvantages associated with such systems, see the accompanyinginfographic.)

A business rule is a statement that defines some aspect of thepolicy, and is intended to control or influence the behavior of thepolicy management. For insurers, underwriting rules are an obviousexample. All of the terms and conditions under which a person maybe issued a policy make up a set of policy rules.

A BRMS provides a central repository for both those businessrules and the application logic that governs the processes andpeople that manage them. By extracting the policy logic from theapplication, application maintenance is simplified and it is easierand faster to modify policy rules. All this also allows for moreconsistent decision-making across all applications.

BRMS technology offers insurers a number of business benefitsthat stem from this enhanced IT agility. Once business rules arestored in the BRMS, compliance updates, product rollouts, orunderwriting changes can be implemented in a fraction of thetime.

Insurers can reduce IT maintenance expense while achieving theflexibility to accommodate rapid policy changes, sinceresponsibility for making the changes is shifted from programmersto policy administrators.

A BRMS can also automate the underwriting process, enablingreal-time policy generation. Rules-based, automated decision-makingstreamlines the process and can remove underwriter intervention forroutine policy requests.

For more complex policies, rules-based exception processingmaximizes underwriter productivity. That's because underwritingautomation reduces administrative and manual tasks, freeing upunderwriting professionals to spend more time on complexunderwriting scenarios and risk management tasks.

In addition, a BRMS can help customer service representativesresolve service requests more quickly and efficiently by storingrules that minimize the need for further contact and back-officeprocessing.

The BRMS can integrate with legacy and other back-end systems,allowing carriers to simplify complex interactions that formerlyrequired access to multiple, disparate systems.

A BRMS can enable business managers to add or modify workflows,offers, or customer services to accommodate shifting requirements.This flexibility helps reduce operating costs while improvingcustomer satisfaction.

A BRMS can also extend the return-on-investment of the ACORD XMLstandard for carriers by supporting pre-loaded ACORD vocabularyenabling the system to understand insurance terms and relationshipsout-of-the-box. This allows business users to more easily authordecision-making rules and policies that can be standardized acrossthe enterprise, its agents and third-party partners.

For most insurers, the question of deploying business rulestechnology is not a matter of "if," but rather "when." Providing aneasier way to create, change and standardize policy rules quicklyacross the insurance value chain is a key driver for successfullyimproving customer satisfaction and reducing claims leakage.

Hans Witt is CEO and president of Haley Systems, based inSewickley, Pa.

Flag: Key Advantages

Head: Why Bother With BRMS?

Business rules technology is helping insurers externalize thebusiness logic that was formerly trapped, in effect, in theirlegacy systems, in ways they can understand. With a BRMS, carrierscan:

o Empower policy administrators, underwriters and other businessusers to create and maintain the rules in systems that supportcritical business processes themselves.

o Gain the control, speed and flexibility they need to modifybusiness rules at the speed that their business conditionschange.

o Eliminate the IT bottleneck caused by dependency on programmerintervention to create and maintain rules embedded in code, whilefostering rule reuse to improve consistency and reliability.

o Perform scenario analysis or try new business processes inlive systems with the confidence to know that improvement can bemade quickly.

"Why go through the pain and expense of a 'rip-and-replace'approach to outmoded legacy applications when a BRMS can prolongtheir useful lives by rendering them much more flexible?"

Hans Witt